Entrepreneurs have a new trick to raise money quickly, and it all takes place online, free from the constraints of banks and regulators. Since the beginning of 2017, 65 startups have raised $522 million using initial coin offerings — trading a digital coin (essentially an investment in their company) for a digital currency, like Bitcoin or Ether.
One recent example: Bay Area coders earned $35 million in less than 30 seconds during an online fund-raising event, NYT reports. They sold Basic Attention Tokens (BAT coin) which will grant buyers access to an innovative ad-free web browser the coders are intending to create, but have yet to launch.
And that's the catch: these investors are buying promises in the form of coins for a product or service that doesn't exist.